L&I assigns every employer one or more risk classifications based on the nature of their business. Did you know there are more than 300 risk classifications used in Washington state? Risk classifications reflect a variety of different industries with different workers’ compensation hazards. Read on to learn more.
What is a risk classification? A risk classification is a method for grouping risks with similar characteristics to set insurance rates. Washington developed its own risk classification system that is based on the degree of hazard for each occupation or industry and tailored to Washington’s businesses and industries.
For example, based on accident and injury rates, industries like construction, logging, manufacturing, and agriculture are generally assigned higher workers’ compensation premium rates. Risk classes with higher risk or hazards are assigned higher rates to account for the number of claims and the types of claims assigned to these industries.
On the other hand, industries with a lower risk, such as retail, education, and real estate, for example, generally pay lower worker’s compensation premium rates.
Each risk classification has an assigned rate that is used to calculate an employer’s workers’ compensation premium.
Workers’ compensation insurance (also known as industrial insurance) provides wage replacement and medical benefits to workers injured on the job. The most effective way to reduce workers’ compensation costs for your company is by creating a safety culture.
Since companies and workers contribute jointly to the workers’ compensation funds, it benefits everyone to work as a team and promote workplace safety!
At the end of the workday, everyone wants to return home safe and healthy. Our next blog post will cover this very important topic of safety culture so stay tuned.
Additional Resources
Risk Classification & Reporting Rules
WAC 296-17-31029 Insurance Principles
All final risk classification decisions are made by L&I. For questions or more information on risk classifications:
Contact L&I
Phone: 360-902-4817
Fax: 360-902-4988
Mailing address
Washington State Department of Labor & Industries (L&I)
Employer Services
PO Box 44140
Olympia WA 98504
